Last week's deal between Freddie Mac and Norwest Mortgage, which will result in Norwest's selling nearly all its conventional loans to Freddie, caught the attention of Wall Street and fixed-income investors, who greeted the news by selling Freddie's bonds.

One Wall Street mortgage analyst said the deal translates into a "short- term negative for Freddie Mac paper" because it increases the supply of the so-called Golds securities.

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